Development of the Stacks Ecosystem and the Prospects of Satoshi Nakamoto's Upgrade

Recently, the demand for Bitcoin block space has been increasingly stable, creating greater market space for products built on Stacks. Stacks is building a platform aimed at exploring more complex and refined Bitcoin pricing tools, with the ultimate goal of transforming it into a true Bitcoin second-layer network when technical conditions allow. This vision is gradually being realized, and the Stacks development team plans to complete the Satoshi Nakamoto upgrade before the Bitcoin halving in April next year.

Although these developments are exciting, Stacks has recently seen a decline in attention due to a shift in market focus. This actually presents us with a unique opportunity – as several key milestones are about to be achieved, the theoretical foundation of Stacks has been strengthened, but public attention has decreased.

This year, the average gas fees on the Bitcoin network have increased by 50 times, while Ethereum has only increased by 2 times, highlighting the strong demand for block space in the Bitcoin sector. The ongoing development of Ordinals further indicates that people want Bitcoin to be more than just a holding asset. Bitcoin's status as a global macro asset has been strengthened, and the market's demand for alternative stores of value is also increasing, all of which are driving Bitcoin's dominance.

The demand for Bitcoin primarily stems from its stability as a store of value and the regulatory clarity expected from the approval of a U.S. spot Bitcoin ETF. This combination of external factors has increased the demand for the products being developed by Stacks: an efficient, flexible, and secure BTC-priced environment for exploring more complex BTC applications and ultimately achieving a true Bitcoin second-layer conversion.

Despite the fact that Satoshi Nakamoto's upgraded development has taken up most of Stacks' resources, Stacks has largely been overlooked in the past few months. The Stacks development team has completed Mockamoto (simulated Satoshi), which will be used to implement the online functionality of Satoshi nodes and RPC endpoints. This is a key milestone that will enable the Stacks team to launch the Satoshi mainnet as scheduled in April next year, synchronized with the Bitcoin halving.

This upgrade will be one of the most critical among several important catalysts. Currently, the Stacks network is somewhat cumbersome to use, as its block time is the same as that of the BTC first layer and it does not support bridging BTC for security reasons. After the upgrade, Stacks will significantly speed up, with block time reduced to 5 seconds, and will support sBTC—a secure and efficient wrapped version of Bitcoin, naturally integrated with the Stacks consensus mechanism. Despite current technical limitations, the Stacks ecosystem remains resilient, with several strong and continuously expanding teams building in this field.

After the upgrade, Stacks will be fully secured by 100% of Bitcoin's hash rate, bringing it closer to a second-layer network of Bitcoin. We anticipate that several significant events in the future will greatly enhance the attention on STX:

1. It is expected that the Bitcoin spot ETF will be approved in January next year, which will trigger extensive discussions centered around Bitcoin and promotions by major financial institutions.

2. Stacks is collaborating with Singapore's Spartan Group and South Korea's DeSpread to expand its global influence. Marketing activities will be launched in South Korea, Singapore, Hong Kong, and Dubai in the first quarter of next year to raise awareness of Bitcoin L2.

3. Stacks will announce several key milestones before March next year, and is expected to gain more attention in the coming weeks. The second testnet is expected to launch before January next year.

4. New Bitcoin L1 tools (such as BitVM) can achieve minimal trust transfer between Bitcoin L1 and L2, bringing Stacks closer to becoming a true Bitcoin L2.

The relative valuation of STX against BTC and other L1/L2 ecosystems has reached impressive levels. By April next year, Stacks is likely to complete the Satoshi Nakamoto upgrade, providing the first fully operational BTC-priced ecosystem. At the same time, we will be approaching the BTC halving, and the Stacks ecosystem will be in the mid-term of marketing activities. This should provide a favorable environment for STX to narrow its valuation gap with other assets.

The current trading price of STX is 0.15% of the fully diluted market cap of BTC, while the total of Ethereum L2 is 10% of the fully diluted market cap of ETH. While a certain degree of discount is reasonable, the current level of discount indicates a significant potential upside for STX.

After the Satoshi Nakamoto upgrade, Stacks will be able to provide a high-performance Bitcoin-priced NFT market, which is not only suitable for more efficient Ordinals trading but also includes its unique L2 NFT series. Through the sBTC mechanism, Ordinals can be locked on Bitcoin L1 and then traded faster, at lower costs, and more flexibly on Stacks' L2.

In addition, by using sBTC, we can explore more traditional DeFi applications, such as lending – the Zest team has already begun development in this area on Stacks. Other token swap markets based on sBTC will also emerge, with ALEX laying the groundwork for this. These applications not only explore new functionalities but also generate automatic yields, and are expected to gradually take over the market, providing users with an innovative and practical ecosystem.